Question

*Please show work and explain*

An investor bought 100 shares of Copier Corp. for $90 a share. The firm paid an annual dividend of $4 a share and commissions on the purchase were $15 and on the sale were another $15. The price of the stock rose to $120 in one year.

What is the percentage return earned on the investment if the stock is bought for cash (i.e., the investor did not use margin)?

Show your answer in percentage terms to two places to the right of the decimal point (e.g., “00.00%). But do not include the percent sign (%). If the correct answer is a negative value, then do include the negative sign (“-“) with your answer.

Answer #1

Return earned on investment | (Net sales + Dividend - Net purchase)/Net purchase | ||||

Cost of purchase | (100*90)+15 | ||||

Cost of purchase | 9000+15 | ||||

Cost of purchase |
9015 |
||||

Cost of sale | (100*120)-15 | ||||

Cost of sale | 12000-15 | ||||

Cost of sale |
11985 |
||||

Total dividend received | 4*100 | ||||

Total dividend received | 400 | ||||

Return earned on investment | (11985+400-9015)/9015 | ||||

Return earned on investment | 3370/9015 | ||||

Return earned on investment |
37.38% |
||||

Thus, return earned on investment is 37.38% | |||||

*Please show work and explain*
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